Download New Financial Regulator Seen to Target Chaebol

New Financial Regulator Seen to Target Chaebol
Korea Times
By Kim Yon-se
Yoon Jeung-hyun, who took office as chairman of the Financial Supervisory Commission
(FSC) Wednesday, has vowed to turn up the heat on rule-breaking chaebol-based financial
services companies.
In his inaugural address at the FSC building in Yoido, he said the FSC and its investigative
arm, the Financial Supervisory Service (FSS) would eliminate the residual ``too-big-to-fail’’
and ``too-big-to-discipline’’ syndrome in Korea.
``Regardless of the size of the financial services companies and corporate governance, we
will treat everyone equally,’’ he said. ``Although we will ensure the independence of each
company, we may enhance the regulations for companies which have difficulty regulating
themselves.’’
Yoon’s project is in line with recent suggestions by the International Monetary Fund (IMF),
which advised Korea to implement a three-year roadmap for reform of the family-controlled
chaebol or conglomerates.
The suggestions represented by the Washington-based organization include banning
executives from controlling subsidiaries with minimal investment or circular shareholding
structures and the easing of regulations on chaebol that improve their governance.
He also said the FSC/FSS would enable the financial market to kick rule-violators and
insolvent financial companies out of the market at any time. ``By boosting investigation into
unfair trading and renovating corporate governance and accounting, financial regulators will
help the local market gain investor confidence.’’
Amid the ongoing reforms in the accounting sector initiated by the former FSC Chairman Lee
Jung-jae, the IMF has welcomed the movement in Korea, saying, ``it will contribute to more
accurate and timely information for investors. There is also further scope for improvement
which we hope Korea will look into.’’
Yoon also said market confidence is the most important factor concerning the revamping of
the nation’s regulatory system. ``It should be revised so people find financial services more
efficient.’’
Choosing between a civil-servant-based regulatory agency and a private regulator depends
on each nations’ market situation, he added.
Asked about the fiasco in the credit card sector, he said the consumer debt crisis was
triggered by the government’s efforts to promote domestic demand (in late 1990s). ``We
will do our best to prevent similar cases from occurring in the market.’’
Yoon also said he definitely feels responsible as a policymaker at the Finance-Economy
Ministry for being ill-prepared for the 1997 financial crisis. ``But the crisis was a natural
result caused by accumulation of a variety of structural problems.’’